Opti Canada Inc. says bitumen production at the Long Lake oil sands joint venture with Nexen Inc. increased to 27,900 barrels per day in the second quarter but the operation will fall short of its 2011 output target.
July 14, 2011
by CANADIAN PRESS
CALGARY: Opti Canada Inc. says bitumen production at the Long Lake oil sands joint venture with Nexen Inc. increased to 27,900 barrels per day in the second quarter but the operation will fall short of its 2011 output target.
The Calgary-based company had announced in November that it expected 2011 average production volume would be between 38,000 and 45,000 barrels per day, of which between 13,000 and 16,000 bpd would be Opti’s share.
“Based on lower than expected production since making this forecast, we do not expect to achieve this range,” Opti said.
The junior oil sands company, which owns 35% of Long Lake with Nexen Inc. owning the rest, announced it will restructure under court supervision.
Opti has been undergoing a strategic review for well over a year. On July 13, it announced a plan for secured creditors to invest $375 million in new money. If the plan succeeds, creditors would get shares in a newly recapitalized company and Opti’s current shares will be cancelled. Trading of the stock has been halted.
A major reason for Opti’s financial difficulty is the delay in getting Long Lakes bitumen production, which uses an upgrader technique developed by Opti, to targeted levels – increasing the partners’ costs and lowering revenue.
“Through operational experience gained over time, we have improved our understanding of the Long Lake reservoir. With this experience, we recognize that a portion of our initial 90 well pairs will not meet production expectations. We are addressing this primarily by the accelerated development of well pads,” Opti said in a production announcement.
Opti said Long Lake isn’t expected to produce 50,000 bpd until sometime after Pads 12 and 13 come onstream next year.
At the same time, Opti and Nexen are evaluating oil sands projects using different technology at Kinosis, targeting 10,000 to 40,000 barrels per day of bitumen.
© 2011 The Canadian Press